Just five days before the Senate Banking Committee's markup of the CLARITY Act on May 14, Bloomberg reported on May 9 that the five largest US banking lobbying groups had jointly demanded changes to the stablecoin yield compromise reached two weeks earlier between Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD). The groups — the American Bankers Association (ABA), Independent Community Bankers of America (ICBA), Bank Policy Institute (BPI), Consumer Bankers Association (CBA), and Financial Services Forum (FSF) — acted collectively to alter a provision that the crypto industry had hailed as a breakthrough concession.
The Tillis-Alsobrooks Compromise: Drawing a Line in the Sand
On May 2, Tillis and Alsobrooks unveiled a compromise on stablecoin yields, with two core rules: ban passive yield on stablecoin balances (equivalent to bank deposit interest), and allow activity-based rewards tied to specific user actions such as payments, transfers, or platform participation. Crypto industry players quickly endorsed the deal. Coinbase, Circle, and several crypto trade groups on May 4 called for the committee to advance the bill by May 11. Senator Cynthia Lummis and Tillis publicly defended the compromise on May 5; Lummis stated on X on May 6 that the CLARITY Act is her top legislative priority.
Banks' Real Fear: Cheap Deposit Funding at Stake
Bloomberg noted that banks' opposition is not purely legal. The real worry is the definitional wiggle room in "activity-based rewards." U.S. banks rely heavily on cheap deposits — about 80% of lending capital comes from checking and savings accounts, which pay minimal interest. If stablecoins can offer any form of yield, even disguised as rewards, customers may shift funds from bank deposits to USDC or other stablecoin wallets. Every dollar leaving a checking account erodes banks' cheapest funding source. In a joint statement on May 9, the five groups argued the current "activity-based" language is too vague, allowing issuers to effectively pay interest and compete with banks for deposits without the same regulatory constraints.
Coinbase, Circle Push Back
The crypto industry countered sharply. Coinbase and Circle argued that platform activity rewards are fundamentally different from deposit interest — the former rewards specific user behavior, while the latter is unconditional time-value compensation. Multiple crypto trade groups warned lawmakers that changing the compromise under banking pressure could unravel industry support for the entire legislative framework, reigniting gridlock. The Bloomberg report paints a picture of two opposing forces pulling the same senators: banks want narrower boundaries for activity rewards, while crypto defends the existing text.
Three Scenarios for the May 14 Markup
The Senate Banking Committee markup is scheduled for May 14 at the Dirksen Senate Office Building. Bloomberg outlined three possible outcomes. First, banks succeed in narrowing the activity-reward definition before markup, causing crypto to withdraw support and blurring the path to a full Senate vote. Second, Tillis and Alsobrooks hold the line, the committee completes markup, and the bill advances to floor debate. Third, the Trump administration — which has signaled support for stablecoin legislation — applies pressure from the White House, strengthening the political shelter for the Tillis-Alsobrooks compromise. With less than five days to go, the timing of Bloomberg's report itself signals that a decisive phase in this banking vs. crypto showdown is imminent.